Executive Council approves new mining lease on Mesabi Range

Thursday

Mar 7, 2013 at 8:35 AMMar 7, 2013 at 8:40 AM

An iron ore mining lease near Coleraine, Minn., that could bring between $50 million and $220 million to the state's Permanent School Trust Fund during the life of the mine was unanimously approved today by Minnesota Executive Council.

An iron ore mining lease near Coleraine, Minn., that could bring between $50 million and $220 million to the state's Permanent School Trust Fund during the life of the mine was unanimously approved today by Minnesota Executive Council.

The leasing company, Magnetation LLC, is based in Grand Rapids, Minn. The proposed mining project is in an area generally known as the Cushing and Buckeye Reserve, on the west end of the Mesabi Range.

Members of the Executive Council present today include Gov. Mark Dayton, Secretary of State Mark Ritchie, Attorney General Lori Swanson and Auditor Rebecca Otto. The Minnesota Department of Natural Resources (DNR) makes recommendations on mineral leases to the Executive Council, which is charged with approving them.

No private land surface owners are affected by this proposal. Surface ownership is currently held by the state as school trust lands, with a small amount of county tax-forfeited land. Magnetation also has surface ownership of nearby properties, as well as some private mineral ownership. The project is adjacent to the inactive Canisteo mine.

Revenue generated from school trust lands is credited to the Permanent School Trust Fund. Interest and dividends from the fund are transferred twice a year to all school districts of the state. Mineral royalties from school trust lands are the largest contributor to the Permanent School Trust Fund, which has received record contributions in recent years due to increased mineral revenue.

Approval of the Cushing/Buckeye Reserve mineral lease is the first step in development of the proposed iron ore mine. Prior to starting a new mine, certain aspects of the proposed project will undergo a thorough process of environmental review and permitting to ensure that all state-required environment safeguards are in place.

The company plans to develop its comprehensive project plan within the next five years.

The DNR is working with local organizations and citizens on possible displacement of facilities due to the proposed mining project. The mining site has a number of surface leases for things such as ski, bike and snowmobile trails and a gun club. DNR staff is working with local groups to find viable locations for the trails and facilities. The current and future locations of the trails and facilities could also be considered in the environmental review of the project.

On Feb. 14, DNR staff presented the proposed mining lease to the Western Mesabi Range Planning Board, which is made up of primarily local mayors and county officials. An outcome of the meeting was exclusion of a key parcel from the project to preserve a community ski hill and jump.

Minnesota holds mineral rights on about 12 million acres in the state. These mineral rights have been acquired through federal grants, tax forfeitures, mineral forfeitures and exchanges.